Raw Japan
Slices of Japanese business, politics and life
Too soon to see Japan intervening on the yen
The yen’s surge to a 13-year high against the dollar, record highs against sterling and a multi-year peak against the euro are unlikely to push Japanese authorities into trying to halt the currency’s rise.
Japan hasn’t intervened in the foreign exchange market since March 2004, after a 15-month long, 35 trillion yen ($390 billion) selling spree aimed at preventing the currency’s strength from snuffing out an economic recovery.
And even though the plunge in exports is looking painful, it seems unlikely the Ministry of Finance and the Bank of Japan will step in just yet, although rhetoric about watching currency markets closely will continue and may get louder.
Analysts reckon the trigger for any intervention would be a steeper fall in the stock market and a much sharper and sustained climb in the yen — or a steeper fall in the dollar — to 85.00 yen per dollar or beyond. The yen was at 89.00 on Friday and it has been as strong as 87.10 already this year, as investors worried about the U.S. and European banking sectors have played safe by buying yen.
The reason a weaker share market would be a trigger is that Japanese authorities will be concerned that falling stocks will hit business sentiment further, impair companies’ ability to raise capital, erode national wealth and harm the financial sector.
